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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Ei = (%dQd good X)/(%d Income)
Monopsonist
Price Ceiling
Income Elasticity
Perfectly inelastic
2. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Determinants of Demand
Monopolistic competition
Consumer surplus
Natural Monopoly
3. The mechanism for combining production resources - with existing technology - into finished goods and services
Variable inputs
Production function
Complementary Goods
Price elastic demand
4. Costs that change with the level of output. If output is zero - so are TVCs.
Total variable costs (TVC)
Increasing Cost Industry
Price discrimination
Shutdown Point
5. Exists if a producer can produce more of a good than all other producers
Increasing Cost Industry
Perfectly competitive long-run equilibrium
Absolute Advantage
Law of Increasing Costs
6. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Average Fixed Cost (AFC)
Productive Efficiency
Economics
Natural Monopoly
7. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Price elasticity
Cross-Price Elasticity of Demand
Fixed inputs
Production function
8. Product demand - productivity - prices of other resources - and complementary resources
Average Product of Labor (APL)
Non-collusive oligopoly
Determinants of Labor Demand
Dead Weight Loss
9. AVC = TVC/Q
Average Variable Cost (AVC)
Absolute prices
Monopoly long-run equilibrium
Average Total Cost (ATC)
10. The price of a good measured in units of currency
Law of Demand
Law of Supply
Absolute prices
Marginal Resource Cost (MRC)
11. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Law of Supply
Price Elasticity of Supply
Accounting Profit
Price discrimination
12. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Resources
Luxury
Economic Profit
13. The difference between total revenue and total explicit costs
Implicit costs
Perfect competition
Accounting Profit
Monopolistic competition
14. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Necessity
Price floor
Profit Maximizing Resource Employment
Producer surplus
15. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Constant Returns to Scale
Consumer surplus
Complementary Goods
Excise Tax
16. The sum of consumer surplus and producer surplus
Total Welfare
Total Revenue Test
Subsidy
Four-firm concentration ratio
17. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Comparative Advantage
Dead Weight Loss
Long Run
18. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Price discrimination
Marginal Analysis
Marginal tax rate
Collusive oligopoly
19. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Economies of Scale
Constant cost industry
Consumer surplus
Dead Weight Loss
20. Occurs when LRAC is constant over a variety of plant sizes
Dead Weight Loss
Constant Returns to Scale
Average Product of Labor (APL)
Substitution Effect
21. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Diseconomies of Scale
Substitution Effect
Substitute Goods
Opportunity Cost
22. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Income Elasticity
Marginal Benefit (MB)
Private goods
23. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Decreasing Cost industry
Monopoly long-run equilibrium
Marginal Productivity Theory
Demand for Labor
24. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Natural Monopoly
Variable inputs
Surplus
Marginal Benefit (MB)
25. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Market power
Total Fixed Costs (TFC)
Positive externality
Constant cost industry
26. The ability to set the price above the perfectly competitive level
Law of Increasing Costs
Constant Returns to Scale
Market power
Law of Supply
27. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Price elastic demand
Substitution Effect
Marginal tax rate
Price Ceiling
28. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Free-Rider Problem
Constrained Utility Maximization
Market power
Total Revenue
29. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Normal Profit
Marginal tax rate
Price floor
Monopoly long-run equilibrium
30. The difference between total revenue and total explicit and implicit costs
Surplus
Short run
Economic Profit
Producer surplus
31. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Market power
Four-firm concentration ratio
Consumer surplus
Shortage
32. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Perfectly competitive long-run equilibrium
Total Revenue Test
Incidence of Tax
Decreasing Cost industry
33. Ed = (%dQd)/(%dP). Ignore negative sign
Comparative Advantage
Price elasticity
Monopsonist
Substitute Goods
34. Ed > 1 - meaning consumers are price sensitive
Monopolistic competition
Necessity
Price elastic demand
Marginal Resource Cost (MRC)
35. The output where ATC is minimized and economic profit is zero
Absolute Advantage
Average Variable Cost (AVC)
Break-even Point
Cross-Price Elasticity of Demand
36. All firms maximize profit by producing where MR = MC
Total Fixed Costs (TFC)
Inferior Goods
Implicit costs
Profit Maximizing Rule
37. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Substitution Effect
Allocative Efficiency
Price elasticity
Excess Capacity
38. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Determinants of Labor Demand
Average Fixed Cost (AFC)
Normal Profit
Short run
39. Total product divided by labor employed. APL = TPL/L
Production function
Inferior Goods
Profit Maximizing Resource Employment
Average Product of Labor (APL)
40. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Positive externality
Determinants of Demand
Cross-Price Elasticity of Demand
Monopoly
41. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Marginal Revenue Product (MRP)
Law of Demand
Excess Capacity
Implicit costs
42. Ei > 1
Price floor
Free-Rider Problem
Luxury
Productive Efficiency
43. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Excise Tax
Producer surplus
Economic Growth
Marginal tax rate
44. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Perfect competition
Resources
Average Fixed Cost (AFC)
Economics
45. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Producer surplus
Market Economy (Capitalism)
Consumer surplus
Oligopoly
46. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Inferior Goods
Utility Maximizing Rule
Monopoly long-run equilibrium
Profit Maximizing Rule
47. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Perfect competition
Opportunity Cost
Spillover benefits
Absolute Advantage
48. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Marginal Product of Labor (MPL)
Normal Goods
Free-Rider Problem
Constrained Utility Maximization
49. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Economic Growth
Short run
Determinants of Demand
Profit Maximizing Resource Employment
50. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Determinants of Demand
Determinants of Supply
Excise Tax
Perfect competition